Tom Poje

see 1.416-1 m-10 ee is a particpant in a top heavy dc plan, so must receive. there is nothing that mentions 'being eligble for the profit sharing portion'

the so called 'rude' comments from archimage are a joke. we met at the conference and had a good laugh about some of the things that get said on benefits link. Andy: Quite ironically, I made it up to the slide that said "If time permits..." - in both sessions, with 5 minutes to go. How is that for timing. I had even said before hand I didn't expect to get through everything. I also thought that there was probably enough info on imputed disparity that an individual could at least look at it and understand. (by the way, Andy was kind enough to look over the material and make a few comments/suggestions.) so in the remaining minutes they got a quick look at grouping accrual rates and an Elvis Pension song. The voice was begining to go at that point, you have to love it when someone comes up to you and says they always buy 'your tapes'.

humor, of course, is only relative. If you think the scarecrow from the Wizard of Oz who got blown up out of Florida by the hurricane to speak only because of the marvelous brain given him by the Wizard is funny, so be it. If you believe him when he says that it really isnt the brain, but rather brain pills that does the trick, and he starts flinging out SMARTIES into the crowd, ok. (sorry, I forgot to do that in the first session) by luck I had used a clip art of the St. Louis Arch for the slide dealing with the Gateway Minimum. It only naturally led to a few digs about the Yankees and other baseball comments. how could I have known months ago that things would turn out the way they did? heck, I had fun, it is always my hope that others not only enjoyed the presentation but learned something as well. From the comments I received it was worth all the extra time I put into it.

Archimage - you crack me up. My straw did cow from the cow pasture, so your comment is as accurate as can be. I am full of... Andy: speaking of "some funny guy dressed as a scarecrow is making round the office" the lady from my office who attended made a similar comment. The scarecrow was bouncing around the room so much that the cameraman had a hard time keeping up.

I quoted the following from the proposed regs during my talk at the ASPPA Conference. (By the way, the proposed regs are suppose to be final within a month. I don't suspect there will be any major changes to them) In addition, the plan could have a short plan year if the plan terminates, the employer makes the safe harbor contributions for the short year, employees are provided notice of the change, AND the plan passes the ADP test. IRS Q and A #17 at the same conference: If original notice provided was the "maybe we'll' make the 3% contribution" notice, then no amendment is necessary. If the notice provided was the 'fixed 3% contribution', then no amendment to eliminate the 3% contribution is POSSIBLE (barring plan termination). [emphasis NOT MINE in this case] ........ thus, you can not eliminate the SHNEC during the year - unless plan is terminated!!!!!!!!. obviously you can amend and eliminate in future years. since safe harbors are 'deemed' to use current year testing you would be stuck to current year testing under the 5 year rule.

See ERISA Outline Book 8.96 (2003 edition) Dual Eligibility: "1. New Businesses. A dual eligibility provision is most common in a plan established for a new business. The plan may provide for immediate entry of employees hired by a certain date (since no employee has completed a year of service), but a one year of service requirement for employees hired after that date. See Chapter 2 (Section II, Part G) for a discussion of other uses of dual eligibility." There is a very good reason for this rule. Prevents an owner from setting up a business, having immediate elig. for himself and then, by magic, since everyone else hired after that date, doesn't get in nor included in the test. dang, the owner could conceivable get 2 years of contribution without this rule. in the same vein 8.118 expand coverage for 401(k) plan, er must make QNEC (Sorry, I don't think I even have a note like that in the Answer Book. have to get that added for next time) my understanding of the corrective amendment would be that it only needs to be enough people to pass coverage, thus you can be discriminatory amongst the NHCEs. If you have default language in the document, then you would have to follow that to determine who to bring into the plan.

Tom's brain is shot. The scarecrow's is almost fried as well, but I guess you would have had to attend my talk to understand that. well, the talk was more of a presentation. Andy: your swinging entry wasn't addressed, but that idea still smells bad to me. actually, the IRS mentioned that they will soon release something on 'short term' employees, though I don't think in the same vein as you are using the term. If it smells bad..... Lady MacDuff (I always wanted to say that, sounds so Shakespearen): Overall I think it went real well, but as for me...estimate around 1500 attendees. Can't say I got anything enlightening at the conference. certainly nothing I would call major at the IRS Q & A. but then I have been going to the Conference since 1997. back then I could sit in on any talk and learn a lot. now its getting harder to pick up info, especially since I've sort of specialized myseld into coverage and cross testing things like that. (I did get to meet Archimage.) This year's session was further complicated for me by the fact I was giving a talk at 9:00 on Tuesday, and then repeating at 3:45. I don't find it easy to get up in front of people and share info because it really makes a difference to me to make it worth that while. So much of Monday I was probably more in a zombie type mode. Based on comments the talk went really well, and was supposedly one of the better ones. It was given by a scarecrow using that marvelous brain the Wizard gave him. well, yes, I really was wearing a costume. I have a strong feeling there will be a picture I wont be able to live down in one of the ASPA publications soon. And they got two 'pension' songs - the scarecrows song from the Wizard of Oz "If you only use Lorraine" [my boss], and then an Elvis song. So, I was able to share some knowledge and make it fun at the same time. Plus it looks like I will end up on the IRS Q and A committee, so fun time stuff.

the answer to this is found in Notice 2000-3, question 5 A plan does not fail merely because plan matches both deferrals and after tax contributions if: 1. matching contributions of deferrals are not effected by the amount of after tax contributions (I guess that would mean you have a formula (basic match) for deferrals and another formula for after tax contributions OR 2. matching contributions are made with respect to the sum of deferrals and after tax. (In other words, if you deferred 6% and after tax was 3%, under the basic match you still end up at 4% match) All after tax contributions must be tested. In addition, You are allowed to include all matching contributions or just those matching contributions that are greater than 4%, so it really depends on what type of formula you have.

1.401(a)(4) -11(g)(2) for purposes of satisfying minimum coverage................... a corrective amendment.....grant allocations to those who did not benefit... thus, change date of eligibility with a corrective amendment. although if you are referring to a 2003 calendar year plan I guess you would be past the 9 1/2 month rule.

all ees employed by one employer, but different ees in different plans. therefore permissive aggregation rules apply. However for coverage purposes include all ees in the denominator. If the associates plan consist of mostly HCEs then coverage for 401k would probably fail if you do not permissively aggregate.

Brian: It is the notice that says 'maybe'. and that is done before plan year begin. if the plan goes that route, it must be amended before the end of the year to include safe harbor language (either permamently or just for that plan year), not 'maybe' safe harbor language. it sounds like it is too late. The client should have provided the notice with the maybe, just to prevent the problem. in a similar vein, even though the document contains safe harbor language. if the notice had said 'maybe' the plan could be amended to take the language out.

sounds correct. because you fail 414(s) definition of comp, your testing comp must be total, even though most employees received an allocation based on less than that. and if you have to go to cross testing, then you have the gateway minimum which is 5% of 415 comp (or 1/3 of allocation comp)

you are correct. given those conditions, the plan could fail coverage (unless the NHCEs receive a greater % of pay than the HCE and the plan passes the average benefits percentage. (Given the facts you provided it would pass rate group testing) the facts seem rather unique, to start a plan and include ees immediately, but guess anything is possible

I believe you could do that, not as an enhanced match, but rather as a discretionary match to all participants eligible to defer(no hours or last day provision). My understanding you would combine the matches to see if the rate of match is still satisfied. based on what you said, it would be as the levels of match above 3% would never be greater than the levels of match below 3%.

Roger Clemens helped the American League get home field advantage (via the All Star Game appearence) for the World Series. Maybe he is still a Red Sox at heart. Yankees payroll since 2000 : 630 million # of world series won : 0

well, leaving this weekend. hey, if you are going stop by booth -#513 - my company has a booth this year. always nice to put a name with a face, plus I'm 'suckered' into giving a talk at one of the sessions on safe harbor and new comparability. hopefully I can make the talk as lively as some in the past - at least one 'pension' song.

that would appear to be the case, which makes sense since the safe harbor is to be 12 months long. (the exception being a short plan year in which you are still ongoing, but have a 12 month before and 12 month after. In your case, it would prevent Mr Owner from deferring $$$$$$$$$$$$ in the early months and then terminate the plan but still get the free ride on the ADP test. The govt doesn't like that since the rank and file wouldn't be able to defer big $$$$$$$$ in the short period.

The preamble to the proposed regs would explain the situation as follows Proposed Regs An employer can AMEND the plan to eliminate matching contributions with respect to future elective deferrals, provided that the matching contributions are made with respect to pre-amendment elective deferrals, employees are provided with the notice of the change, and the opportunity to change their elections, and the plan satisfies the ADP or ACP test for the plan year using the current year testing method. Proposed Regs A plan could have a short plan year in the year the plan terminates, if the plan termination is in connection with a merger or acquisition involving the employer, or the employer incurs a substantial business hardship… In addition, the plan could have a short plan year if the plan terminates, the employer makes the safe harbor contributions for the short year, employees are provided notice of the change, AND the plan passes the ADP test. Finally, a plan could have a short plan year if it is preceded and followed by 12-month plan years as a section 401(k) safe harbor plan.

maybe I'm not on the money, but the excel sheet I use appears to have worked correctly again. now if I can get someone to build me a covered comp calculator...

ooooooooooooooooooooooooooops. thanks If the plans are aggregated for coverage, then yes, you MUST test together. If the plans are NOT aggregated for coverage, then no, you CANT test together.

If the plans are aggregated for coverage, then yes, you MUST test together. If the plans are aggregated for coverage, then no, you CANT test together.

Thanks Gary. I'm always willing to defer to someone who probably knows more about this stuff than I do. The only articles I know of are: Earned Income Calculations by Cynthia Groszkiewicz which appeared in The Pension Actuary February 1993. I only have a few pages of that article stuffed in a folder. But a search of the internet for Cynthia shows she is still very active in the pension end of things. one could contact her. Qualified Plan Contributions for the Self-Employed - The Mathematics of Parity by Paul G Griesemer, and Karen A. Winn the copy of the article I have goes back to 1991(though I don't know where I got it from) . A search of the internet under Pauls name lists the the same article as appearing in The Compensation Planning Journal March 4, 1994. As far as I can tell it was (or still is) a BNA publication. Note: in regards to the second article, the copy I have uses 1991 limits, etc. since it was indicated the article appeared in 1994 it might have been updated. Using Publication 560 and the example from 1991 to calc FICA Line 4 100,000 * .9235 = 92350 Line 5 92350* 2.9% = 2678 + [12.4%*53400] = 9300 The current publication says add 10788 which is simply 12.4% * 8700, so if one uses similar logic you would use 12.4% * TWB in the article by Paul and Karen FICA on 100,000 was calculated as follows: 57,823 * 92.35% * 15.3% plus 42,177 * 98.55% * 2.9% integration level was 53,400. The author explains how this is grossed up to 57,823. so, using this method FICA tax = 9375, a difference of $75. Either the article has an error in its ‘grossing up of the integration level’, or FICA was calculated slightly different back then!!!! Since I have no publication 560 going back that far I can’t check that. But you could try contacting either of the authors if you really want an article written on the subject.

the Consumer Price Index numbers for the last quarter are: 189.4 189.5 189.9 (Sept was released today) so according to my notes next year's comp limit should be 210,000, 415 allocation is 42,000, db limit 170,000, key ee 135,000 and hce at 95,000. of course, I could have something built into my spreadsheet which is wrong and things will stay as is. I imagine they will announce the numbers at the ASPA conference next week.

Before people say stuff they shouldn't, etc, etc. I actually have some extremely old and brittle notes that go back to 1991 that, as far as I can tell, talks somewhat along the lines of Moe (e.g. grossing things up, etc.) but back then there was a medicare cut off level, which was done away with years ago. I vaguely recall a change being made to the software (Pentabs) when the medicare cut off was removed. In other words, I think the calculation was done along the lines of what Moe is talking about at one time. (I could be wrong) And a big reminder: The excel sheet I posted did have at least one glaring error, but easily fixable, as indicated in an earlier post.

try question 3 on http://www.abanet.org/jceb/2001/qa01irs.html